ReadWrite - gritty entrepreneurshttp://readwrite.com/tag/gritty-entrepreneurs
enCopyright 2015 Wearable World Inc.http://blogs.law.harvard.edu/tech/rssTue, 03 Mar 2015 12:19:22 -0800Finding - and Funding - the Next Mark Zuckerberg<!-- tml-version="2" --><div tml-image="ci01b2fa8550016d19" tml-render-position="center" tml-render-size="large"><figure><img src="http://a4.files.readwrite.com/image/upload/c_fill,cs_srgb,w_620/MTIyNDM1NTg5Mjk4NDgyNDU3.png" /></figure></div><p>It’s a startup truism: Investors fund people, not ideas. But ideas are much easier to assess than people. So how <em>do</em> venture capitalists decide if an entrepreneur is worth millions in funding?</p><p>The easy answer is: They look at the founder's resume.</p><p>“The mantra in our business has always been ‘serial entrepreneurs,’” says Bob Ackerman, managing director at Palo Alto-based venture firm <a href="http://www.allegiscapital.com/">Allegis Capital</a>. “These are people who have demonstrated they know how to navigate the minefield that lies in front of every startup. If they get through it successfully once, the bet is they can get through it the next time. In our current fund, two-thirds are serial entrepreneurs. And that shows up in the performance of the fund.”</p><h2>Going Beyond the Obvious</h2><p>That’s reasonable. But it’s obvious.</p><p>What about finding the next boy genius? The next Larry Ellison or Bill Gates or Marc Andreessen or Mark Zuckerberg? They’re all entrepreneurs who built significant companies (to put it mildly) on their first try. How do VCs and angels identify people like that, who will step up to the plate and hit a grand slam in their first at-bat?</p><p>That’s where judgment and experience come in. And that’s why many top VCs are former operating executives themselves. The idea is that experience can help them peer into the soul of first-time entrepreneurs and see if they have what it takes to get through the minefield. Are they coachable? Do they listen? Yes, they need the passion and enthusiasm, but they also need to keep one foot on the ground?</p><p>“The history of startup founders making it all the way to exit tells you the deck is pretty much stacked against them,” Ackerman says. “But there are examples of those who do it.”</p><p>He recalls a first-time entrepreneur he funded named Scott Weiss, who started a company called <a href="http://www.cisco.com/web/about/ac49/ac0/ac1/ac259/ironport.html">IronPort</a> - and sold it to Cisco for $830 million. “When I looked at Scott, there was the confidence and bravado you would expect from an entrepreneur,” Ackerman recalls. “But behind that bravado was a lot of hard work, a lot of solid research and a lot of solid validation. I looked under the hood and found a tremendous amount of substance.”</p><p>The first time they sat down, Weiss asked Ackerman who in his network had managed a company that had experienced the sort of growth Weiss was expecting for IronPort. He said up front that IronPort was his first try and that he wanted to connect with veterans who could tell him right away if he started veering off track.</p><h2>Maturity… and a Map</h2><p>“To me, that demonstrated a tremendous amount of maturity,” Ackerman says. “Yes, he had that aggressive drive and enthusiasm and confidence, but also the realization that he could step on a mine anytime along the way and lose his whole thing. And he wanted to make sure he didn’t make those mistakes. I loved that.”</p><p>There are two ways to navigate a minefield. You can do it by braille. Or you can get a map.</p><p>“We look for entrepreneurs who go get the map,” says Ackerman, “who are prepared to do the hard work to develop that map rather than just rush through the minefield, hoping they’ll get through. Venture is all about people. An ‘A’ idea with a ‘C’ team has low probability of success. A ‘B’ idea with an ‘A’ team is a much better bet.”</p><p><em>Lead images courtesy of Netscape,&nbsp;<a href="http://www.gpaumier.org/">Guillaume Paumier</a>, World Economic Forum and Oracle Corporate Communications.</em></p>It’s a startup truism: Investors fund people, not ideas. But ideas are much easier to assess than people. So how do venture capitalists decide if an entrepreneur is worth millions in funding?http://readwrite.com/2012/07/03/finding-and-funding-the-next-mark-zuckerberg
http://readwrite.com/2012/07/03/finding-and-funding-the-next-mark-zuckerbergWebTue, 03 Jul 2012 05:00:00 -0700Tim Devaney and Tom SteinTurning the Unemployed Into Entrepreneurs<!-- tml-version="2" --><p>The dreaded pink slip - it’s still an all-too-common occurrence in America today. Despite an economy that appears to be on the road to recovery, there are still too many Americans being laid off every day. So what are we going to do about it?</p><p>Most unemployed Americans have only a few options. Most spend their days applying for jobs, not just because they need the opportunity to work and earn a living, but also because job searching is a prerequisite for collecting unemployment compensation.</p><h3><strong>Get a Job - or Start a Business?</strong></h3><p>But&nbsp;<a href="http://www.wyden.senate.gov/news/press-releases/wyden-encourages-states-to-create-self-employment-assistance-program-as-labor-department-releases-guidelines">thanks to Senator Ron Wyden</a> (D - Ore.) and several other U.S. senators, Americans in some states have another option. <a href="http://www.wyden.senate.gov/priorities/self-employment-assistance">Self-Employment Assistance</a> (SEA), a provision in the <a href="http://www.finance.senate.gov/newsroom/chairman/release/?id=c42a8c8a-52ad-44af-86b2-4695aaff5378">Middle Class Tax Relief and Job Creation Act of 2012</a>, legislation passed by Congress and signed by President Barack Obama in February, allows the states to “<a href="http://www.whitehouse.gov/blog/2012/05/24/job-seekers-job-creators">empower unemployed workers to start their own businesses</a>.”</p><p>Although the U.S. Department of Labor just announced that <a href="http://www.dol.gov/opa/media/press/eta/ETA20121073.htm">$35 million in funds were available to “develop, enhance and promote SEA programs</a> in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands,” five states - Delaware, Maine, New Jersey, New York, and <a href="http://www.oregon.gov/EMPLOY/ES/SEEKER/self_employment_assistance.shtml">Oregon</a> - already have active SEA programs.</p><p>To entrepreneurial types this seems like a no-brainer. Scott Gerber -&nbsp;<a href="http://www.readwriteweb.com/start/2012/05/8-hard-earned-insights-into-raising-startup-capital.php">ReadWriteWeb contributor</a>,&nbsp;founder and president of the <a href="http://www.theyec.org/">Young Entrepreneur Council</a>, and a leader in the movement to #Fix Young America (Senator Wyden, in fact, wrote a chapter in Gerber’s <a href="http://fixyoungamericabook.com/">#Fix Young America book</a> addressing this topic) - says SEA is “just common sense… and a simple realization of the new reality of the startup economy.”</p><p></p><div tml-image="ci01b2faaa40016d19"><figure><img src="http://a1.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1NzQ3OTQzODM2OTUz.jpg" /></figure></div><h3><strong>Big Government - or Small Business?</strong></h3><p>There are, of course, those who say SEA won’t work, that it’s just another “big government” program. Gerber counters that argument this way: “Government can’t cure all woes. But there are certain things the government can do, like remove barriers." More to the point, he continues, "It’s obvious that long-term unemployment solutions like sending resumes isn’t working.”</p><p>Actually there’s more fodder to support SEA, which isn’t exactly a new idea. Wyden first wrote legislation to “empower states to provide unemployment compensation to individuals for the purpose of funding self-employment” back in 1985.</p><p>And just a few years later - in the early 1990s - two demonstration projects (allowing people to start businesses with their unemployment benefits) were created in Massachusetts and <a href="http://www.esd.wa.gov/uibenefits/specialservices/training/self-employment-assistance-program.php">Washington state</a>. The results? Researchers concluded SEA projects “increased the likelihood of self-employment and the amount of time participants were employed.”</p><p>Additional research looked at SEA programs established in the late 1990s in Maine, New Jersey and New York. That study showed SEA participants “were 19 times more likely than non-participants to be self-employed at any point after their period of unemployment, and were four times more likely to have obtained any type of employment.”</p><p>There’s more. Oregon has been operating an SEA program since 1995, and a survey shows nearly half of its program’s participants have created an average of 3.12 new jobs. SEA programs, says Senator Wyden, turn unemployment insurance into “job multipliers.”</p><h3><strong>Who Qualifies?</strong></h3><p>You can’t just say you’re starting a business to qualify for the SEA program. Those eligible to collect unemployment must have a “viable business plan” and “be working full-time” to launch “a sustainable business.” If you qualify, you will be able to collect your unemployment benefits for a maximum of 26 weeks, even though you are not searching for full-time employment.</p><p>To further help startup entrepreneurs, the Department of Labor is calling on the resources of the <a href="http://www.sba.gov/">Small Business Administration</a>, <a href="http://www.score.org/">SCORE</a>&nbsp;and the <a href="http://www.sba.gov/content/small-business-development-centers-sbdcs">Small Business Development Centers</a> to provide technical assistance and training in the participating states.</p><p>To some startups an unemployment check may seem too small and trivial to make a difference. But during startup, every dollar counts. And as Gerber says, “A lot of little somethings will help move the economy forward.”</p><p>The White House and the Department of Labor want to encourage other states to adopt SEA as soon as possible. States must apply for the grants by June 30, 2013.</p>The dreaded pink slip - it’s still an all-too-common occurrence in America today. Despite an economy that appears to be on the road to recovery, there are still too many Americans being laid off every day. So what are we going to do about it?http://readwrite.com/2012/06/05/turning-the-unemployed-into-entrepreneurs
http://readwrite.com/2012/06/05/turning-the-unemployed-into-entrepreneursWebTue, 05 Jun 2012 04:00:00 -0700Rieva LesonskyThe Tech CEO Hall of Shame<!-- tml-version="2" --><div tml-image="ci01b2fad320018266" tml-render-position="center" tml-render-size="large"><figure><img src="http://a5.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTIyOTYzNzU0MjY1.jpg" /></figure></div><p>In the grand pantheon of disgraced technology company CEOs, the resume blunder of ousted Yahoo Chief Executive Scott Thompson seems almost trivial. Claiming an unearned degree pales in comparison to the true titans of tech transgressions - whose careers were toppled by everything from massive fraud and grand larceny to inappropriate dalliances with underlings. Each imploded in their own particular way, but all their stories come mixed with heaping helpings of arrogance and a dollop of coverup.</p><p>Here’s your chance to meet the real world of Horrible Bosses, and get a glimpse of how they were rewarded - or occasionally punished - for behaving badly:</p><p> Scott Thompson, Former Yahoo CEO</p><div tml-image="ci01b2fad390016d19"><figure><img src="http://a2.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTI1Mzc5ODA5ODk0.jpg" /></figure></div><p>Scott Thompson was at <a href="http://www.yahoo.com/">Yahoo</a>’s helm only five months before getting the boot for claiming to have a computer science degree from a college that didn’t offer one at the time. While a charitable observer might say he never lied, Thompson also never explained how that erroneous info got on his work bio. Nevertheless, the untruth gave investor activist Dan Loeb just what he needed in his proxy battle to stack the Yahoo board with his supporters. Thompson was given the heave-ho this month and Loeb, who runs the hedge fund Third Point, got the board seats. Thompson didn’t leave empty handed. While he missed out on a severance package, he did walk away with $7 million in bonuses from the struggling Internet portal.</p><p> Brian Dunn, Former Best Buy CEO</p><div tml-image="ci01b2fad410016d19"><figure><img src="http://a4.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTI3MjU4NzIxNTYx.jpg" /></figure></div><p>Brian Dunn stepped down in April as chief executive of electronics retailer <a href="http://www.bestbuy.com/">Best Buy</a> for what the company later called an “extremely close personal relationship” with a female employee more than 20 years younger. The 51-year-old Dunn did not use company resources in his “friendship,” which included lunch and drinks during the workweek and on weekends. The pair also seemed to stay in touch a lot. During two separate trips abroad for a total of nine days, Dunn contacted his “friend” by mobile phone at least 224 times. In the end, the board found that Dunn’s behavior violated company policy, yet he was still entitled to some big bucks. His separation package totaled $6.6 million.</p><p> Mark Hurd, Former Hewlett-Packard CEO</p><div tml-image="ci01b2fad480016d19"><figure><img src="http://a5.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTI5MTM3Nzc1MjA2.jpg" /></figure></div><p>Mark Hurd resigned in August 2010 as chief executive of tech giant <a href="http://www.hp.com/">Hewlett-Packard</a> following a dalliance with a contract employee who later accused Hurd of sexual harassment. While investigating the allegations, the HP board found that Hurd had doctored expense reports in order to hide his personal relationship with marketing consultant Jodie Fisher, a former soft-core porn actress. Fisher denied the relationship with the married Hurd was sexual. She settled privately with Hurd and both sides agreed not to discuss the affair. Hurd left HP with $12.2 million in severance and enough stock to earn millions more - and was immediately hired by his friend Larry Ellison as co-president, director and board member of Oracle.</p><p> David Edmondson, Former RadioShack CEO</p><div tml-image="ci01b2fad4e0016d19"><figure><img src="http://a5.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTMxMDE2OTQ5MDE3.jpg" /></figure></div><p>David Edmondson resigned in February 2006 as CEO of electronics retailer <a href="http://www.radioshack.com/">RadioShack</a> after lying about his education. Edmondson topped Yahoo’s Thompson by claiming to have two college degrees when he had none. The CEO apologized for the “embarrassment” he brought to the company. RadioShack’s hometown newspaper, The Fort Worth Star-Telegram, broke the story, reporting Edmondson never graduated from the unaccredited bible college he attended. The newspaper also found that the CEO was facing a trial on his third arrest on drunk-driving charges. Edmondson left the company with a severance payment of less than $1 million in cash.</p><p> Sanjay Kumar, Former Computer Associates CEO</p><div tml-image="ci01b2fad570016d19"><figure><img src="http://a3.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTMyODk1ODcxNTkw.jpg" /></figure></div><p>Sanjay Kumar, ex-CEO of IT management software and solutions company Computer Associates, pleaded guilty in 2006 to his role in a $2.2 billion accounting fraud. He also admitted to interfering with a federal investigation by authorizing a payment of $3.7 million to silence a potential witness. Kumar, who was once a part owner of the New York Islanders hockey team, was sentenced to 12 years in prison, which he started serving in 2007. Computer Associates, which later changed its name to <a href="http://www.ca.com/">CA Technologies</a>, paid more than $225 million to a shareholder restitution fund. Kumar contributed about $20 million from his own assets.</p><p> John Rigas, Founder, Former CEO of Adelphia Communications</p><div tml-image="ci01b2fad5f0018266"><figure><img src="http://a5.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTM1MzExNzkwNjk0.jpg" /></figure></div><p>After leading <a href="http://en.wikipedia.org/wiki/Adelphia_Communications_Corporation">Adelphia Communications</a> for more than five decades, Chief Executive John Rigas was sentenced in 2005 to 15 years in prison in a multibillion-dollar fraud case that collapsed the company he founded. Rigas and his son Timothy Rigas, who was Adelphia’s chief financial officer, were convicted of 18 felony counts of fraud and conspiracy. The younger Rigas got 20 years in prison. The Rigases were convicted of stealing $100 million from Adelphia, which had been the fifth-largest cable company in the nation. They also were found guilty of conspiring to hide $2.3 billion in company debt.</p><p> Bernard Ebbers, Former CEO of WorldCom</p><div tml-image="ci01b2fad670036d19"><figure><img src="http://a1.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTM3NDU5Mjc0MzQy.jpg" /></figure></div><p>Bernard Ebbers was sentenced in 2005 to 25 years in prison for leading the nation’s largest-ever corporate fraud. The former chief executive of telecom carrier WorldCom was convicted of nine felonies in an $11 billion accounting scandal at the company. When WorldCom filed for bankruptcy in 2002, it was the largest in U.S. history and led to shareholders and employees losing billions of dollars. Ebbers forfeited the bulk of his assets to burned WorldCom investors. Those assets included a Mississippi mansion and other holdings worth as much as $45 million. The day before his sentencing, Ebbers called the predicament he was in “bizarre.”</p><p><strong>Robert McCormick, Former CEO of Savvis Communications</strong></p><p>Robert McCormick resigned in 2005 as chief executive of IT infrastructure management outfit <a href="http://www.savvis.com/en-us/pages/home.aspx">Savvis Communications</a> (now owned by <a href="http://www.centurylink.com/">CenturyLink</a>) after it was revealed that he spent $241,000 entertaining business associates at a Manhattan strip club. The company’s board might have looked the other way, if McCormick hadn’t used his corporate charge card to pay for lap dances and then claim to be a victim of fraud when American Express demanded its money. Dubbed the “The Lap Dunce” by <a href="http://articles.nydailynews.com/2005-10-25/news/18314515_1_savvis-communications-corp-corporate-credit-card-audit-committee">The New York Daily News</a>, McCormick never submitted an expense report for the party at Scores. The company claimed it did not pay for McCormick’s night out on the town.</p><p> Joe Nacchio, Former CEO of Qwest</p><div tml-image="ci01b2fad6e0028266"><figure><img src="http://a5.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTM5NjA2NzUyNTM3.jpg" /></figure></div><p>One-time <a href="http://en.wikipedia.org/wiki/Qwest">Qwest</a> CEO Joe Nacchio was convicted in 2007 of 19 counts of insider trading and was sentenced to nearly six years in prison. Nacchio was convicted of selling $52 million in stock in 2001 after it became known internally that the telecom carrier (also now owned by <a href="http://www.centurylink.com/">CenturyLink</a>) was in danger of missing sales forecasts. Nacchio, who resigned in 2002, was ordered to forfeit almost $46 million and pay a $19 million fine. In 2011, Nacchio sued his lawyers from prison, claiming they were negligent. He also accused them of overbilling, pointing to charges that included lawyers' underwear purchases.</p><p> Gregory Reyes, Former CEO of Brocade</p><div tml-image="ci01b2fad770016d19"><figure><img src="http://a2.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM1OTQxNzU0MjM2MTg1.jpg" /></figure></div><p>Gregory Reyes was convicted in 2007 in a stock options backdating scandal at networking solutions vendor <a href="http://www.brocade.com/index.page">Brocade</a> and received a 21-month prison term. The conviction was later overturned and the ex-CEO was retried. Prosecutors won again and he was sentenced in 2010 to 18 months in prison. At his second sentencing hearing, Reyes broke down crying, and his attorney had to read his statement for him. At his second criminal trial, Reyes blamed the company’s outside counsel, which he claimed signed off on the backdating of stock options. The judge at the sentencing hearing didn’t buy the argument, saying that, at some point, people have to take responsibility for what they say and do.</p><p><em>Thompson photo courtesy of Yodel Anecdotal.&nbsp;</em><em>Raju image via World Economic Forum/Flickr.</em></p>In the grand pantheon of disgraced technology company CEOs, the resume blunder of ousted Yahoo Chief Executive Scott Thompson seems almost trivial. Claiming an unearned degree pales in comparison to the true titans of tech transgressions - whose careers were toppled by everything from massive fraud and grand larceny to inappropriate dalliances with…http://readwrite.com/2012/05/28/the-tech-ceo-hall-of-shame
http://readwrite.com/2012/05/28/the-tech-ceo-hall-of-shameWorkMon, 28 May 2012 06:00:00 -0700Antone GonsalvesStartup's Petition Raises $3M in 24 Hours if Senate Passes Crowdfunding Act<!-- tml-version="2" --><div tml-image="ci01b2fb5700018266" tml-render-position="center" tml-render-size="large"><figure><img src="http://a2.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM2NDg5MzYyNTcxODc4.jpg" /></figure></div><p></p><div tml-image="ci01b2fb5700018266"><figure><img src="http://a2.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM2NDg5MzYyNTcxODc4.jpg" /></figure></div><p>"We can gamble in Vegas. We can donate on Kiva or Kickstarter. But it's illegal to purchase $100 of stock in a job-creating business? That makes no sense."</p><p>That is the tagline to a new project called WeFunder from three TechStars Boston alum who are trying to garner support for the "<a href="http://thomas.loc.gov/cgi-bin/query/z?c112:S.1791:">Democratizing Access to Capital Act</a>" (S.1791) that would allow entrepreneurs to crowdfund startups. Launched yesterday with the hopes of getting $100,000 from 100 pledges, the guys behind <a href="http://www.wefunder.com/petition">WeFunder</a> have already seen near $3 million in promised funds from more than a 1000 supporters if the Senate passes the bill. </p><h2>Different From A Kickstarter Project</h2><p>The notion of crowd funding a startup is fundamentally different than that of endorsing a project on Kickstarter. At Kickstarter, people fund projects and have no ownership over the project once it is completed. It becomes a lot more complicated when the notion of investing in actual companies is taken into account.</p><p>Right now, the only entities that can invest in startups are those that are accredited investors such as venture capital firms or venture banks. What the Democratizing Access to Capital Act of 2011 would do would be to amend the Securities Act of 1933 that outlines when and how investments in companies can be made through the Securities and Exchange Commission. This is where a mess of SEC rules and regulations come into play. Many of the regulations that the SEC implements are designed to protect the investor. The Securities Act of 1933 was put in place in 1933, four years after the 1929 market crash that led to the Great Depression and caused many affluent American's to lose their fortunes. It was a necessary act that helped protect people but also spur U.S. businesses. To a certain extent, the Democratizing Access to Capital Act fits in the same realm.</p><p>Sponsored by Sen. Scott Brown of Massachusetts, the bill comes three years after the market bust in 2008 that started what we now refer to as "The Great Recession." Many political and business leaders in the U.S. are looking toward the technology sector to lead America back to the heights of economic prosperity. The Wall Street Journal today published an article saying that the<a href="http://online.wsj.com/article/SB10001424052970203471004577140413041646048.html"> next economy will be based on three pillars</a>: big data, smart manufacturing and the wireless revolution. It is clear that the U.S. has the technological prowess to create a dynamic new economy. Yet, with capital markets spread thin, the next big American company working on a technological advance could die for lack of funding before it even gets its feet off the ground. </p><h2>Tremendous Impact</h2><p>The impacts of the Democratizing Access to Capital Act could be tremendous. It would open up the flow of cash to startups from real people. The act would allow a single non-accredited investor to put money into a startup they has the power to create jobs.</p><p>"Think of it as Kickstarter for equity, where everyday non-accredited individuals can invest up to $1k in a startup they believe in," said Daniel Sullivan, one of the founders of WeFunder and the founder of crowdsourcing startup Crowdly. "I think this is a really important issue that involves how the general tech consumer can help drive the economy."</p><p>The other two founders of WeFunder are Nicholas Tommarello of Escapist and developer Nick Plante. </p><p>Some may think that startups like WeFunder are looking to disrupt the venture capital industry. That is far from the truth. Venture capitalists and bankers are not going anywhere. Startups still need guidance, mentors, legal support and infrastructure that VCs can offer them. They also have more money and better insider knowledge than the individual non-accredited investor. For example, just look to <a href="http://bhorowitz.com/2012/01/31/why-has-andreessen-horowitz-raised-2-7b-in-3-years/">the $2.7 billion that VC firm Andreesen Horowitz has raised </a>in the last three years. What the Democratizing Access to Capital Act does is lower the bar for the transference of money for startups looking to build a great idea. The ability of money to flow freely across the ecosystem should be of great benefit to all involved. <br tml-linebreak="true" /></p>"We can gamble in Vegas. We can donate on Kiva or Kickstarter. But it's illegal to purchase $100 of stock in a job-creating business? That makes no sense."
That is the tagline to a new project called WeFunder from three TechStars Boston alum who are trying to garner support for the "Democratizing Access to Capital Act" (S.1791) that would…http://readwrite.com/2012/01/31/startups-petition-raises-3m-in
http://readwrite.com/2012/01/31/startups-petition-raises-3m-inWebTue, 31 Jan 2012 00:39:00 -0800Dan RowinskiLittle Startup Makes It To the Big Stage, the Super Bowl<!-- tml-version="2" --><p> There comes a time in the life of any startup where the founders look at each other, let out a sigh of relief and say, "we're going to make it." Startup founders and their first employees work countless hours making sure the product is functioning, helping clients and customers and responding to mini-catastrophes that crop up all over the place like wild fires during the Santa Ana winds. </p><div tml-image="ci01b2fb84c0018266"><figure><img src="http://a1.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM2Njg2MTI1NzU1Njcz.jpg" /></figure></div><p>The founders of Boston-based startup <a href="http://www.promoboxx.com/index.php">Promoboxx</a> must be breathing that sigh of relief. Promoboxx has landed a deal with Chevy to power its Super Bowl commercials from local dealers. Yes, that Super Bowl. The one where Madonna is playing the halftime show this year. How did a little startup out of TechStars Boston make it to the biggest stage in the world?</p><p> Chevy will utilize the PromoBoxx platform to engage its 6,000 dealers with co-branded campaigns designed for each specific dealers. The commercials are being released before the Super Bowl and local dealers are given tools to promote their own specific version of the campaign online through email, Twitter, Facebook and their own websites. </p><div tml-image="ci01b2fb8520036d19"><figure><img src="http://a4.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyNDM2Njg3NzM2MzczODYy.jpg" /></figure></div><p>Think about the logistics behind that for a second. That is 6,000 dealers with their own co-branded commercials. Each dealer has thousands of customers. That is a lot of very specific, locally targeted marketing going on. That means that Promoboxx's platform needs to be very robust and scalable to deliver content at rates that size. </p><p>"We built it to be a cloud scalable platform that is able to handle practically simultaneous infinite users and large national brands" said Jamie Fiedler, lead engineer at Promoboxx.</p><p>To accommodate Chevy, Promoboxx had to create new user interface and unique experience for each of the 6,000 dealers. That is not easy. Promoboxx teamed with Big Fuel, a social media company out of New York, to handle the issue. </p><p>"The design and development team was updating the Promoboxx dealer engagement portion of the platform at the same time as they were revamping the entire product," Promoboxx CEO Ben Carcio told ReadWriteWeb. Therefore, all of this new technology being developed will morph into the overall product offering. This made the Promoboxx technology team realize how flexible the product needed to be when working with such large brands, which forced them to build a Modular RESTful API."</p><p>Promoboxx focused on creating a flexible backend to handle the needs of each specific dealer. This will be the biggest test for Promoboxx. With 6,000 dealers of varying degrees of technological prowess, the platform needs to be simple enough to be everything to everybody.</p><p>"The way the process works can vary per brand, so the importance of a flexible API/backend was super crucial. There wasn't a defined path that every company or dealer would follow, so flexibility was an essential part," said Fiedler.</p><p>Super indeed. Super Bowl that is. Promoboxx has likely hit an inflection point in its evolution. The company got its first big break. Now the real work starts. <br tml-linebreak="true" /></p>There comes a time in the life of any startup where the founders look at each other, let out a sigh of relief and say, "we're going to make it." Startup founders and their first employees work countless hours making sure the product is functioning, helping clients and customers and responding to mini-catastrophes that crop up all over the place…http://readwrite.com/2012/01/20/little-startup-makes-it-to-the
http://readwrite.com/2012/01/20/little-startup-makes-it-to-theWebFri, 20 Jan 2012 04:15:00 -0800Dan RowinskiHow to be the Anti-Microsoft<!-- tml-version="2" --><p> Yesterday, I <a href="http://www.readwriteweb.com/mobile/2011/11/webscorer-a-new-mobile-app-for.php">wrote a short review of a new mobile app from Webscorer</a> that has a curious lineage. The startup came to be from a group of several ex-Microsoft developers and is led by Vesa Suomalainen. I have known Vesa for many years, and first met him when he ran Microsoft's mainframe communications business with a product called Host Integration server. This was back in the 3270 terminal emulation days and was quite the advanced product for its time. Vesa shared with me some lessons that he has learned with several botched startups since then and what he is trying to do with his latest venture. </p><div tml-image="ci01b29745f0016d19" tml-image-caption=""><figure><img src="http://a5.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyMzI2NDY1NDUzNzgwMjQ5.jpg" /><figcaption></figcaption></figure></div><p>What is interesting about some of these points is how different the kind of company that Vesa is creating from what his team came from in Redmond. It is almost as if everyone learned how little they liked the BigCo mentality and have purposely tried to make things small.</p><ul><li><strong>Don't be optimistic.</strong> Plan that you will struggle initially, and this way you won't end up diluting all (or even much) of your startup capital. "It is always better not to take any outside money and pay everything on your own dime," he told me. Agreed. This means that you have to start off small.</li></ul><ul><li><strong>Set your sights lower</strong>."You don't want to conquer the world, just make a small adjustment over time." Vesa talks about having an excellent niche product that is highly profitable rather than shooting for the stars and failing and losing your entire company. That is what he is trying to do with the racing scoring app.</li></ul><ul><li><strong>Know what not to do</strong>. Learning from your mistakes is just as important as success. Vesa's failure taught him more about what not to do with his present venture. "Watching a startup destroy itself was a very potent teacher." Speaking of which, note: "There are lots of ways to fail, but only one way to succeed." Sounds like something Yoda might say to young Luke.</li></ul><ul><li><strong>Don't make too many promises that you can't keep.</strong> Understand scope creep and keep it under control. Eliminate buttons, reduce functionality, and keep things simple. Resist the temptation to make your product more complex at every turn.</li></ul><ul><li><strong>Don't be greedy, share your equity with your key founding members</strong>. Even if it is a small percentage, you want to retail your key developers and engineering talent. Nothing says loving more than some points of equity.</li></ul><ul><li><strong>Venture lightly with lawyering up your company.</strong> 'Nuff said.</li></ul><ul></ul><p>Feel free to share your own Yoda-isms in our comments. <br tml-linebreak="true" /></p>Yesterday, I wrote a short review of a new mobile app from Webscorer that has a curious lineage. The startup came to be from a group of several ex-Microsoft developers and is led by Vesa Suomalainen. I have known Vesa for many years, and first met him when he ran Microsoft's mainframe communications business with a product called Host Integration…http://readwrite.com/2011/11/30/how-to-be-the-anti-microsoft
http://readwrite.com/2011/11/30/how-to-be-the-anti-microsoftWebWed, 30 Nov 2011 05:30:00 -0800David StromWhat Motivates You?<!-- tml-version="2" --><p></p><div tml-image="ci01b2974380018266"><figure><img src="http://a4.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyMzI2NDU0OTg0OTI4NTM3.jpg" /></figure></div><p>I've found myself thinking a lot about the research being conducted by the <a href="http://startupgenome.cc/">Startup Genome Project</a> these days. The data is an absolute goldmine and provides quantitative benchmarks for issues I've thought about for years. One of the findings from their first report was:</p><blockquote><p>"Most successful founders are driven by impact rather than experience or money."</p></blockquote><p>This certainly maps to my experience as a founder and also working with other entrepreneurs. However, in most cases it's a little more complex than that, as I find a number of goals typically intertwine to get people to jump in and start a business. </p><p> There are players in the ecosystem driven by other goals, such as job creation. For example, the <a href="http://www.kauffman.org/">Kauffman Foundation</a>, an institution I partnered with when I was a research fellow Carnegie Mellon and continue to hold in very high regard, has proposed the <a href="www.kauffman.org/startupact">Startup Act</a> as a way to encourage entrepreneurs and strengthen the economy. </p><p>As part of this, they produced an excellent 3 minute video (embedded below) talking about what entrepreneurs do and specifically highlighting their role in birthing innovations, creating jobs and producing net new wealth.</p><p></p><p> I certainly wouldn't disagree with any of these outcomes from successful founders or a program that makes the economy more entrepreneur-friendly. </p><p> However, getting back to the original question of this post, given the community here at ReadWriteStart, of entrepreneurs and also supporters of entrepreneurs (such as investors), what motivates you? Please leave your answers in the comments below and also explain your role in the ecosystem. </p><p><em><em>DNA photo by <a href="http://www.flickr.com/photos/wheatfields/2073336603/">net_efekt</a></em></em></p>I've found myself thinking a lot about the research being conducted by the Startup Genome Project these days. The data is an absolute goldmine and provides quantitative benchmarks for issues I've thought about for years. One of the findings from their first report was:"Most successful founders are driven by impact rather than experience or…http://readwrite.com/2011/09/09/what-motivates-you
http://readwrite.com/2011/09/09/what-motivates-youWebFri, 09 Sep 2011 04:00:00 -0700Sean Ammirati5 Tips for Raising a Venture Round<!-- tml-version="2" --><p></p><div tml-image="ci01b296f1a0008266"><figure><img src="http://a3.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyMzI2MTAzNjAyNzg1NTYx.jpg" /></figure></div><p>While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and is a critical step in the development of their business. This can be an intimidating experience so I've put together a list of five tips for raising a venture round. This is by no means an exhaustive list so I'd love to hear other suggestions from you in the comments of this post. </p><h2> Tip 1: Make Sure You Are Ready to Scale </h2><p>First, before you even start the process of raising a lot of money, make sure you have figured out your model and are truly ready to scale. <a href="http://www.readwriteweb.com/start/2011/08/its-not-how-big-it-is---its-ho.php">Earlier this week</a> on ReadWriteStart, Steve Blank used research at <a href="http://startupgenome.cc/">The Startup Genome Project</a> and explained:</p><blockquote></blockquote><p>One of the biggest surprises is that success isn't about size of team or funding. It turns out Premature Scaling is the leading cause of hemorrhaging cash in a startup, and death. </p><p> If you're early in the investment process, a small angel round or partnering with an accelerator may be the best approach. In fact, <a href="http://startupgenome.cc/pages/startup-genome-report-1">research</a> conducted by the Startup Genome Project found that the best practice in the first phase, a.ka. discovery, is to only raise between $10,000 and $50,000. </p><h2> Tip 2: Have A Real Lead </h2><p> Next, if you are going to raise a round, find one or two partners to do it with. As <a href="http://www.bothsidesofthetable.com/2011/09/01/the-problem-with-collecting-logos-at-startups/">Mark Suster pointed out yesterday on his blog</a>, he's seeing more and more cases where "entrepreneurs are working hard to make sure they have as many VC names and famous angels on their cap table for signaling value." He explains five problems with this and I couldn't agree more. Remember, once you screw up your cap table it's really hard to go back. So in your first few funding rounds, try to raise money from as few people as possible and make sure they really will help. </p><h2> Tip 3: Conduct Diligence on Your Potential Investors </h2><p> When you get close to finding a lead, don't be afraid to ask to speak to some CEOs who have worked with the firm. They are going to poke and prod your business to figure out if you're someone they want to work with. You should figure out the same thing. Pay special attention to investors who are willing to introduce you to CEOs of their portfolio companies that went through hard times. This is when your potential investor will really show how committed they are to the companies they invest in. </p><h2> Tip 4: Really Understand Key Terms </h2><p> Once you get the term sheet make sure you know how to read it. I strongly recommend reading <a href="http://www.amazon.com/Venture-Deals-Smarter-Lawyer Capitalist/dp/0470929820/ref=sr_1_1?ie=UTF8&amp;qid=1314938619&amp;sr=8-1">Brad Feld and Jason Mendelson's Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist</a>. This will give you tons of information on all the terms you'll encounter when raising a venture round and how they could impact your deal. This includes things like how liquidation preferences impact future rounds and ultimate liquidity, to why VCs ask to expand an option pool before investing as part of their term sheet. Too many entrepreneurs focus exclusive on the valuation number and this book can really help you understand all the implications around the term sheet you receive. </p><h2> Tip 5: Remember Time Kills Deals </h2><p> Once you have a term sheet you are happy with, don't over negotiate. You have a business to run and more importantly don't forget one of the first principals of any sales process: "time kills deals". The worst thing that can happen is for you to drag your feet over some meaningless terms (which you'll understand are meaningless thanks to reading Brad and Jason's book above) and end up having your potential investor get cold feet or even have something that's outside your control change. Just get the deal done once you're happy with the material terms and have an investor you trust and want to work with. </p><h2> Bonus Tip: Run a Great First Board Meeting </h2><p>When the cash is in the bank, you're not done; in fact you are just starting. Once you've raise your round, you'll almost certainly end up with at least one new board member. It's really key that you run a great first board meeting at this point. If this is your first round, this may be the first formal board meeting you've had, so prepare for it and make sure you know what you want to accomplish. This will set the tone for future board meetings so make sure that board members take your meetings seriously. There are a number of great posts on this topic and I may try to summarize these in a future post, but one of my favorites for now is from Guy Kawasaki on "<a href="http://blog.guykawasaki.com/2006/03/the_art_of_the_.html">The Art of the Board Meeting</a>."
</p><p>As I said at the beginning of this post, this isn't an exhaustive list. I'd love suggestions in the comments below for other tips when raising a venture round. </p><p><em></em></p><p> Thanks to <a href="http://www.flickr.com/photos/markcoggins/80003807/">Mark Coggins</a> for creative commons use of the photo. </p><p></p>While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and is a critical step in the development of their business. This can be an intimidating experience so I've put together a…http://readwrite.com/2011/09/02/5-tips-for-raising-your-ventur
http://readwrite.com/2011/09/02/5-tips-for-raising-your-venturWebFri, 02 Sep 2011 00:30:00 -0700Sean Ammirati4 Things Entrepreneurs Should Ignore From the Steve Jobs Formula<!-- tml-version="2" --><p></p><div tml-image="ci01b2974250036d19"><figure><img src="http://a1.files.readwrite.com/image/upload/c_fill,cs_srgb,dpr_1.0,q_80,w_620/MTIyMzI2NDQ5ODg0NTI5MjU0.jpg" /></figure></div><p>If you haven't read my colleague Scott Fulton's post on "<a href="http://www.readwriteweb.com/enterprise/2011/08/the-steve-jobs-formula-and-why.php">The Steve Jobs Formula and Why It Works</a>" go read it right now! It's a very insightful piece written by an expert who literally watched Apple grow up, and there are plenty of lessons for all entrepreneurs in the Steve Jobs formula he spells out. However, to be "fair and balanced" here at ReadWriteWeb I think it's also important to point out some things that as an entrepreneur you'd be well served to disregard. What follows are four factors of the Apple formula to ignore. I'd love to hear what you agree and disagree with in the comments below as well as other factors that should have been included.</p><blockquote tml-render-size="large"><p><em> Read our coverage of the Jobs
resignation here:
</em><ul><li><strong><a href="http://www.readwriteweb.com/archives/steve_jobs_resigns_as_ceo_of_apple.php">Steve
Jobs Resigns as CEO of Apple, Tim Cook Named as Successor</a></strong></li><li><strong><a href="http://www.readwriteweb.com/enterprise/2011/08/as-steve-jobs-steps-down-linux.php">As
Steve Jobs Steps Down, Linux Turns 20: Which Changed the World
More?</a></strong></li><li><strong><a href="http://www.readwriteweb.com/enterprise/2011/08/the-steve-jobs-formula-and-why.php">The
Steve Jobs Formula and Why It Works</a></strong></li></ul></p></blockquote><h2> Don't Be Secretive...Go Anti-Stealth </h2><p>Steve Jobs is notorious for how secretive he is. Every product is built in isolation, and while the details of Apple's product development process are not that open either from what I've heard, often engineers don't even have a full picture of the product they are building. </p><p>A few months ago, returning from SxSW, I <a href="http://www.readwriteweb.com/start/2011/03/is-stealth-the-best-way-to-bui.php">wrote</a> about my concerns about the increasing percentage of business I heard that were building "stealth." As I pointed out in the post, there are three big advantages to building your business in anti-stealth:</p><ul><li> Leveraging product feedback earlier in development </li><li> Building a reputation and community in your target market </li><li> Building relationships with potential investors pre-fundraising </li></ul><h2> Don't Expect a Perfect Version 1.0 ... Release Early &amp; Often </h2><p>Related to this first point, there was an expectation when Jobs stood in front of a crowd to unveil a new product that it was going to be truly amazing, groundbreaking, revolutionary and life changing. As an Apple fan, I must admit I do truly find myself feeling that way about my iPhone, iPad and MacBook Pro. However, as Reid Hoffman is famous for saying, the better advice for most entrepreneurs is to be embarrassed by their first product. </p><p>Basically, I think this one comes down to the fact that very few teams are as strong as the team that Apple assembles, in terms of understanding what a group of people want and building that with limited feedback. In other words, you are no Steve Jobs or Jonathan Ive and so it's extremely unlikely you'll predict as accurately as they what needs to be built. Instead, think about <a href="http://www.readwriteweb.com/start/2011/04/5-tools-to-improve-your-idea-before-you-write-a-line-of-code.php">testing your idea before you write your first line of code</a>.
</p><h2> Don't Start Building in Isolation...Look to Swarm Existing Communities </h2><p>Apple basically starts with the assumption that it can build a community from scratch instead of swarming an existing one. This works for them in most situations - although I think there are even examples where this hasn't worked for Apple (Ping).</p><p>As an entrepreneur, this is foolish. I had the pleasure to meet Chad Hurley for coffee a few months before he sold YouTube to Google because we had a close mutual friend. One really interesting thing he talked about, which I've found myself reflecting on often over the years, is that both PayPal and YouTube were businesses built to swarm existing platforms with unmet needs (payment on eBay for PayPal and videos on MySpace for YouTube). </p><p>Now obviously over time as both - but especially the YouTube/MySpace example - show, you may becoming larger then the platform you start with, but it's very helpful to find an existing large community with a need for what you're offering to get started.</p><h2> Don't Be Closed...Create an API Day 1 </h2><p>Apple products are also notoriously closed. In fact, they are so notoriously closed that Alex Payne <a href="http://al3x.net/2010/01/28/ipad.html">wrote</a>:
</p><blockquote><p>"The thing that bothers me most about the iPad is this: if I had an iPad rather than a real computer as a kid, I'd never be a programmer today. I'd never have had the ability to run whatever stupid, potentially harmful, hugely educational programs I could download or write. "
</p></blockquote><p>This also doesn't work for a startup. As venture capitalist <a href="http://thinkvitamin.com/web-apps/fred-wilsons-10-golden-principles-of-successful-web-apps/">Fred Wilson said at Future of Web Apps last year</a>:</p><blockquote><p>"I think it's important to make your application programmable, and make it possible that others can build on top of or connect to or add value to, in some way, your Web application. That means API's, and in my opinion read/write API's...Not all of our companies, by the way, have launch read/write API's, and we're constantly hounding them to do that, but the important thing about programmability is that when people can add value to your application, they are in effect adding energy to your application, bringing more users to your application, and also bringing more data and more richness to your applications." </p></blockquote><p>So as I said at the beginning, I'd love to hear other factors you think entrepreneurs should avoid from the Steve Jobs formula, or things I've included you disagree with, in the comments below. </p>If you haven't read my colleague Scott Fulton's post on "The Steve Jobs Formula and Why It Works" go read it right now! It's a very insightful piece written by an expert who literally watched Apple grow up, and there are plenty of lessons for all entrepreneurs in the Steve Jobs formula he spells out. However, to be "fair and balanced" here at…http://readwrite.com/2011/08/26/4-things-entrepreneurs-should
http://readwrite.com/2011/08/26/4-things-entrepreneurs-shouldWebFri, 26 Aug 2011 04:00:00 -0700Sean AmmiratiWhat Skills Every New Internet Entrepreneur Needs <!-- tml-version="2" --><p> I had lunch with one of my favorite Internet entrepreneurs today, <a href="http://www.linkedin.com/in/marksawyier">Mark Sawyier</a>, the CEO of Off Campus Media. The company provides college students with apartment listings near their schools, and what started out as an idea five years ago is now a multi-million dollar business. Sawyier came to this business without any formal training in computer science, business, management, or other technology training, yet he is a natural when it comes to running a modern-day Internet business. In the short time we spent today, he came up with a few bon mots and wise thoughts that I want to share with those of you that are thinking about starting your own businesses.</p><div tml-image="ci01b29741e0016d19"><figure><img src="http://a3.files.readwrite.com/image/upload/c_fill,cs_srgb,w_620/MTIyMzI2NDQ4MjczOTExMDY1.png" /></figure></div><ol><li><strong>Know your site demographics.</strong> Sawyier checks Google Analytics and other website tools daily and understands how his search rankings and traffic patterns change and what he has to do to keep the page views coming.
</li><li><strong>Know your business plan is wrong and keep tweaking it in real time.</strong> Anyone who tells you that they have things figured out right off the bat is just plain lying. Don't be afraid to make your biz plan a living, breathing entity.
</li><li><strong>Don't be afraid to leave town to get more money.</strong> St. Louis is not the hotbed of VC activity and especially not for Internet firms. Sawyier went to New York City to get investment capital and is most likely to go there for additional rounds.
</li><li><strong>Understand your distribution channel, or how you reach your customers</strong>. Sawyier early on hired college students on different campuses to promote his service and get landlords and property owners involved in listing their properties. Having feet on the street was a good complement to gaining market share and attention, especially for an Internet business. Don't just rely on Facebook friends and other virtual methods in building your channel.
</li><li><strong>Take risks, innovate constantly and learn from your mistakes.</strong> You aren't selling soap or machine tools. If you have an online business, you need to be continually trying out new ideas and seeing how they fail and figure out what the next tweak will be. Think of this as akin to agile management and don't be afraid to take small risks to learn how to improve your offerings.
</li><li><strong>Organic search is more art than science.</strong> But you need to understand how the daily tweaks that Google makes to its algorithm will influence your rankings and what you have to do to adjust your page content accordingly. If you don't know how to use these tools, watch some videos and learn, and more importantly, figure out what metrics and stats you need to know to be effective. As Mark has told me before, "at the end of the day, the most important thing is having a website that provides the right answers and information to the searchers."
</li><li><strong>It is all about your content</strong>. <a href="http://movingoffcampus.com">Moving Off Campus</a>, his major venture, has tons of content - some 80,000 individual pages, let alone hundreds of thousands of apartment listings. But the content is relevant to one particular audience and one only: college students who want to move out of the dorm, and listings for just their immediate geographic area surrounding the campus. And because the firm is so laser-focused on this content and his audience, he can charge a higher premium for his search traffic than general real-estate want-ad listings.
</li></ol>I had lunch with one of my favorite Internet entrepreneurs today, Mark Sawyier, the CEO of Off Campus Media. The company provides college students with apartment listings near their schools, and what started out as an idea five years ago is now a multi-million dollar business. Sawyier came to this business without any formal training in computer…http://readwrite.com/2011/08/17/what-skills-every-new-internet
http://readwrite.com/2011/08/17/what-skills-every-new-internetWebWed, 17 Aug 2011 05:30:00 -0700David Strom